Where Has All The Money Been Going?

Briefing Paper #281

For two decades, researchers at the Economic Policy Institute have been tracking nine school districts, typical of districts nationwide, to understand how the spending levels and composition in elementary and secondary education have changed over time. Our first report, Where’s the Money Gone?(1995) tracked expenditures from 1967 to 1991. Our second report, Where’s the Money Going?(1997) carried the analysis forward to 1996.

These reports concluded that conventional views of the rise of education spending are exaggerated because inflation in educational services is more rapid than inflation in the economy overall. When an appropriate education price deflator is applied, elementary and secondary school spending increases since 1967 have been substantial, but not as much so as commonly believed.

Data in these reports also showed that most of the real increase in school spending has not been on increasing the resources of schools’ regular academic programs. Rather, larger increases were devoted to special education, a program that consumed very few dollars in 1967. The conventional argument—that there has been a productivity collapse in elementary and secondary education because funds have increased without a corresponding improvement in academic outcomes—we concluded is flawed. It is unreasonable to expect additional funds to produce higher academic achievement for regular students if the additional funds have been directed to students with special needs.

We have now completed a new analysis that carries the data through 2005. We find that the trends identified in earlier reports have continued: real spending increases that are slower than conventionally believed when an appropriate price deflator is used, and a continued growth of special education as a share of total elementary and secondary expenditures.

Publication of the full report, covering changes in the level and composition of spending from 1967 to 2005, is forthcoming. Until that time, to assist researchers and policy makers, this briefing paper contains the data tables that will eventually appear in that full report.

Those who examine these data should refer to the earlier reports, Where’s the Money Gone? and Where’s the Money Going, for explanations of the methodologies employed to develop and calculate the results. The new report, however, contains some additional tables not previewed in the earlier reports. Methodological questions not answered in the earlier reports should be directed to the authors or to the Economic Policy Institute education program (educ_prog@epi.org).

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EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.